Oil analyst tells Forbes: Peak oil by 2017

Respected oil analyst Charles Maxwell has told Forbes – and with it the North American business establishment – to brace itself for peak oil by “2017 or 2018.”

Maxwell (left)  is rapidly becoming the new Matthew Simmons, an establishment peak oil whistleblower. Simmons, present when the term peak oil was coined, went on to obtain a degree of mainstream respect for the concept, based on the pioneering work of M King Hubbert. In the Forbes interview, Maxwell suggests “around 2015, we will hit a near-plateau of production around the world,” with peak oil experienced within two to three years of this.

Much of the reaction to this isn’t over what was said – Maxwell has voiced similar peak oil warnings previously – so much as where it was said. Forbes is not noted as a friend of the peak oil hypothesis, which states geological restrictions mean there will be a time of maximum oil output and that, despite investment and innovation, production will subsequently diminish. Unconventional oil supplies such as Canadian oilsands will not be able to prevent this, despite the hype. Canada’s Prime Minister may claim “Alberta's tar sands are second only to Saudi Arabia as the world’s largest oil reserve,” but these are “energy- and capital- and time-intensive” and have lousy flow rates – output cannot be scaled up to meet the ravenous global demand for oil.

An item in Oil Price, with the clear headline Respected Oil Analyst Forecasts Peak Oil by 2017, notes with surprise that:

UK government's oil shock warning

A UK government minister is preparing for a coming global oil shock – a possible doubling of the price of oil.

As Monday’s UK Daily Telegraph newspaper reported, "Energy Secretary, Chris Huhne, told the Liberal Democrat conference last week that in a world facing economic "shocks" it was possible that the price of oil would double from its current level of about $75 a barrel and that he had ordered his officials to look at the impact of a Seventies-style oil price spike on the British economy."

According to Huhne (right), the UK government is creating an internal report on "what the impact. . . might be in terms of British business, businesses that have nothing to do with energy." This evaluation of the likely economic fallout of oil price volatility follows on from reports that the UK government has been "canvassing views from industry and the scientific community about peak oil," stated an August 2010 item in the Guardian newspaper. This stated that the Department of Energy and Climate Change was refusing to comply with a Freedom of Information request for peak oil "policy documents," possibly relating to a 2009 secret "peak oil workshop" involving government, Bank of England and Ministry of Defence officials.

Book review: Peak of the Devil

It has the greatest title of any peak oil publication I’ve yet come across – but does Peak of the Devil live up to the promise?

The 232-page book will be published by Satya House Publications in October 2010, retailing at $14.95. Chip Haynes, longtime online peak oil writer, has taken the unusual step of creating a beginner’s guide, broken down into 101 chapters of between 400 and 500 words. With at least one cheesy gag in each chapter.

But then, as the book states: “Never lose your sense of humour.”

From the outset, I have to say that “artist, writer, juggler and cyclist” Haynes has produced a decidedly eccentric publication, even in a field so acquainted with the aluminum foil hat brigade. But I must make it clear that there are no wacky ideas in Peak of the Devil. It’s exceptionally well thought-out and balanced: while observing that the world is “over-populated” for an immediate future of less available oil – and consequently less food – it reassures us that life and indeed culture will go on. “Every symphony Beethoven ever wrote can be played without using a drop of oil. . . people really did have lives, full happy lives, before oil.” Evaluating cornucopian claims of energy alternatives and the doomer Mad Max outlook, Haynes suggests “. . .read all you can and don’t forget, the truth is probably somewhere in the middle.”

Battle of the think tanks in peak oil reports

Two think tanks, on different sides of the world, published peak oil reports earlier this month – generating very different levels of media and web coverage.

A draft study prepared for the German military was leaked at the same time Australia’s “most influential progressive think tank” published its own findings. Needless to say, when words like leaked, military and peak oil are put into a headlines, you can guarantee a degree of interest – meanwhile, the Australian report came out shortly after the nation’s August 21 federal election, too late to shape the debate.

Both were published on September 1, but it’s only the German report that seems to have received global attention (it actually came out in German-language media the on August 31, but translation apparently took a day). It would be a pity if the Australian version is overlooked, as it provides a remarkably balanced overview of the whole peak oil debate.

The German report comes from the Future Analysis department of the Bundeswehr Transformation Center, a “think tank tasked with fixing a direction for the German military,” according to the account in Der Speigel. This continues:

Exponentially on purpose: a century-and-a-half of ignored warnings

The peak oil debate is a case of history repeating itself: people have been ignoring warnings about exponential use of finite resources for a century and a half.

The concept of peak oil, based on the pioneering work of geologist M. King Hubbert (right), states that world oil production will one day reach a natural limit due to geological factors. As he observed, “although production rates tend initially to increase exponentially, physical limits prevent their continuing to do so.” In other words, oil is a finite resource, and regardless of technology and investment, output cannot go on increasing year after year. Geology trumps economics, although the latter explains what will happen to oil prices once output begins to decline.

But no-one wants to hear the argument. Even International Energy Agency forecasts of record world oil demand, and warnings that the “era of cheap oil is over” made barely a ripple in the media. (In fairness, they are not talking about peak oil so much as the lack of investment in the oil industry causing spare capacity to slump – but it still means economy-busting oil prices are just around the corner.)

It would seem to be wholly sensible, conservative even, to suggest that exponential growth cannot go on forever. But whenever anyone does say this out loud, they find themselves routinely disparaged and outright misrepresented in the media. But then, the naysayers are well practiced. The arguments go back to the Victorian era.